Eliminating Fees And Launching New Features Will Boost Ticket Engagement

Key Takeaways

• Eliminating organizer side listing fees and expanding ads drive ticket transactions and revenue, enhancing creator investment and event volume.
  
• Focus on high-volume creators and app redesign aims for market share growth and improved margins through increased consumer engagement and ticket sales.
  
• Structural revenue mix changes and ongoing revenue challenges could affect Eventbrite's overall revenue growth and profitability amid elevated expenses and partnership slowdowns.

Catalysts

Operates a two-sided marketplace that provides self-service ticketing and marketing tools for event creators in the United States and internationally.

• Eventbrite's elimination of organizer side listing fees enhances creator acquisition and event volume, expected to increase overall ticket transactions and, consequently, ticket revenue.
  
• The strategic expansion of Eventbrite Ads, with ads revenue growing 35% in Q4 and 83% for the year, is expected to drive higher ticket sales per event, boosting both revenue and margins as more creators invest in promotion.
  
• Eventbrite's redesigned app and new features like It-Lists aim to enhance consumer engagement, expected to drive revenue growth through increased ticket sales as discovery becomes more immersive and user-friendly.
  
• By focusing on high-volume creators and introducing solutions like timed entry events and Stripe point-of-sale, Eventbrite aims to capture a larger share of the paid ticket market, potentially increasing revenue and improving net margins.
  
• The focus on financial discipline, including a leaner operating structure after a workforce reduction, positions Eventbrite for improved scalability and potential future margin expansion as revenue grows, particularly in the latter half of 2025 and beyond.

Eventbrite Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Eventbrite's revenue will grow by 5.4% annually over the next 3 years.
• Analysts are not forecasting that Eventbrite will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Eventbrite's profit margin will increase from -4.8% to the average US Entertainment industry of 9.3% in 3 years.
• If Eventbrite's profit margin were to converge on the industry average, you could expect earnings to reach $35.2 million (and earnings per share of $0.41) by about May 2028, up from $-15.6 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.8x on those 2028 earnings, up from -13.2x today. This future PE is lower than the current PE for the US Entertainment industry at 20.4x.
• Analysts expect the number of shares outstanding to decline by 2.56% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.41%, as per the Simply Wall St company report.

Eventbrite Future Earnings Per Share Growth

Risks

• Eventbrite is guiding to a lower revenue range in 2025 due to structural revenue mix changes, which suggests potential challenges in scaling ticketing revenue and marketplace monetization efficiently. This could impact overall revenue growth.
  
• The company is experiencing a decrease in ticketing revenue, partly due to the removal of organizer fees and ongoing recovery from this impact. This could continue to affect net revenue and pressure margins.
  
• Despite improvements, concerns remain about high margin pressure from the transition year, with lost organizer fees affecting EBITDA margins. This indicates risks to net margins and profitability.
  
• Potential slowdown in partnerships, such as with TikTok, and dependence on various social media channels for ticket sales could hinder efficient consumer discovery and acquisition, affecting revenue and earnings.
  
• Elevated expenses related to chargebacks, fraud remediation, and projected annual performance bonuses might strain operating costs further. This could negatively impact net margins and EBITDA.

Valuation

• The analysts have a consensus price target of $4.633 for Eventbrite based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7.0, and the most bearish reporting a price target of just $3.4.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $380.3 million, earnings will come to $35.2 million, and it would be trading on a PE ratio of 15.8x, assuming you use a discount rate of 11.4%.
  
• Given the current share price of $2.18, the analyst price target of $4.63 is 52.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.